Flex Benefits

What Are They?

The Federal Government has volunteered to pay part of your employees' daycare expenses as well as a portion of their health insurance premiums and medical expenses, even those not eligible under their health insurance policies. Through a plan called Flex Benefits they can pay for these expenses with pre-tax dollars, dollars spent by them before the government takes their cut. Depending on their family's annual income, this savings can range from 24-39%. WOW!

How Come I've Never Heard of This Before?

The companies currently administering Flex Benefits plans are targeting businesses with over 100 employees. Because they cannot offer their services to small businesses at a competitive price, they are not making the small businessman aware of this tremendous plan. Your people will not only hear about Flex Benefits, but as emplyees of Fronteer Payroll Services, they will receive this big company benefit.

How Does It Work?

Prior to each January 1, your employees will determine the amount of money they and their families expect to pay for daycare costs and/or medically-related expenses during the year. Their amounts are then divided up and an equal amount is deducted from your employees' paychecks each pay period, prior to the calculation of taxes.

When an employee or family member incurs an expense, they simply fill out a short claim form, attach a copy of the bill and submit it. A check is then issued as reimbursement. It's as easy as that!

What Are the Drawbacks?

There is one and only one. If your employees do not incur expenses up to their annual amount deducted, the amount of the shortfall is lost. For example, if they elect to have $300 taken out over the course of the year and only incur $250 in expenses, $50 would be lost. For this reason your employees should be somewhat conservative when calculating their annual election amounts.

What Expenses Are Eligible?

HEALTH CARE EXPENSES:
All medical expenses applied to your employees' deductible and co-insurance amounts. These include but are not limited to: Prescriptions, Office Visits, Chiropractic Care, X-Rays, Hospital Bills. Some over-the-counter drugs are now eligible.

All other medical-related expenses which are not covered by health insurance. These include, but are not limited to: Dental Bills, including cleanings and check-ups, Vision Care, including eye exams, glasses, and contacts, Routine Physicals, Prescriptions not covered by health insurance.

MEDICAL PREMIUMS:
All health, dental, and life insurance premiums paid by the employee to the employer for company-sponsored plans.

CHILDCARE COSTS:
Any amount paid to the childcare provider so that you and your spouse can work.
NOTE: If the dependent care portion of Flex Benefits is elected, no dependent care tax credit may be taken on the employee's tax return. A general rule is that if the employee's family makes over $25,000/year they will be better off in the Flex Benefits plan.

What's the Cost to Me, the Employer?

Nothing! Well, nothing more than you are paying right now. As the employer you will continue to pay matching social security on your employee's wages up to the legal maximums, just as you always have. Any social security taxes saved through the plan will be retained by Fronteer Payroll Services as an administrative fee.

Summary

Flex Benefits is a big company benefit that you as a small business owner can now offer to your employees, saving them valuable tax dollars and costing you nothing.